Is Your Great Idea A Real Business?

Entrepreneurs constantly comb their brains and the world around them for new ideas. The trick often lies in figuring out whether a great idea actually has the potential to be a great business.

For instance, putting cup holders into cars was a great idea 30 years ago, but not one that made for a great business on its own.

"Ideas are free and often plentiful," says Jay Azriel, professor at the JD Brown Center for Entrepreneurship at York College of Pennsylvania. "Business opportunities, on the other hand, come from ideas that have been more thoroughly thought out and researched."

To sift out true business opportunities from the sand of merely bright ideas, would-be entrepreneurs can ask a series of questions. A primary one: Does this fill a void? A clever idea is nothing more than a science project if no one actually needs the resultant product. "You have to determine that there's something actually missing to a specific market--something you're going to supply," says Tom Lane, founder of Propertyroom.com, an auction site for recovered and seized items sitting in back rooms of police departments.

And even if an idea appears to fill a void, it may simply not be something the market is ready for. When possible, always ask this of your idea: Does it pass a live-fire test? Many ideas lend themselves to an easy litmus test to determine if they'd be needed or popular. A newfangled baked good, for instance, could be tested at a farmer's market before being pitched to retailers. If the sweet concoction doesn't sell at all to the market crowd, the product may need to be re-examined before getting pushed in bigger ponds.

If a breakthrough or an idea comes in a technology-intensive business, entrepreneurs must be wary of how fast technology can change. The simple question that must be asked here: Does the idea have a shelf life? "While no one has a crystal ball, the proactive entrepreneur will be on top of potential issues and opportunities with clear plans for the future and monitoring devices to watch for leading indicators of change," says Jim Porter, a professor at Widener University's School of Business Administration.

If the idea does have shelf life, the next natural question is simple: How high is the barrier to entry? The best ideas have high barriers to entry, says Kanchana Raman, CEO of Avion systems, a telecommunications company. If an idea is good but not patentable, bigger competition could overrun you overnight.

If a business idea is naturally protected by a high barrier to entry, here's the next important question: Is the idea scalable? The best business ideas incorporate plans that can be replicated and easily taught so they don't require the founder to be the business all on his or her own, says Susan Wilson Solovic, CEO of SBTV.com, a St. Louis-based online network focusing on small business. "If you are the business all alone, then you really haven't started a business, you've just created a job for yourself."